Thursday, May 21, 2009

The much anticipated Smart Contracting Caucus met this week for the first time since being created over a year ago by former House Oversight and Government Reform ranking member Tom Davis, (R-VA). The intent of the Caucus was to consider thoughtful federal procurement reform by having a type of 360-review of issues facing the contracting community, with participation from federal agencies, academia, industry and the oversight community. Their conclusions have been highly publicized and reported; the acquisition workforce is in crisis and needs help through an infusion of resources, greater individual empowerment and new leadership.

Some of the comments reported from the panel:

"This is a crisis," said Scott Amey, general counsel of the Project on Government Oversight, a Washington watchdog group. "The acquisition workforce has been ignored for so many years."

"We need to get back to a core of well-trained and well-paid [acquisition workers]," Chvotkin said. "And we need to trust their judgment."

The focus on the panel was to recommend a reform of not only the acquisition workforce through increased and streamlined hiring practices, training, and helping the profession compete with the private sector in compensation, but also to change the culture of federal government to treat contracting as a strategic asset and an important function in the operations of government management.

One of the more significant comments came from Steven Schooner, co-director of the government procurement law program at The George Washington University Law School, who commented on the procurement system itself. Mr. Schooner correctly noted that the system is not fundamentally broken and overhaul will only exacerbate current problems.

Reform needs to focus on workforce development and creating long-term solutions for hiring and retaining talent in the contract profession for real change to move forward. I have commented on talent acquisition, and creating the next generation of contract leaders who have a strategic business focus that the profession desperately needs. I think this next-generation workforce needs to be one of the primary focuses of the hiring reforms, in addition to creating a private-sector like environment of a real professional development to help empower decision making and establishing the respect and level of trust that the profession once enjoyed. Just hiring bodies is meaningless unless new hires are educated, talented, focused, and given the incentives to stay in the profession and create an impact on both their careers and the nation as a whole. Government business revolves around contracts, as we need to understand that and change the way we view this profession to make it an attractive one and encourage public service in the leaders of tomorrow.

Tuesday, May 19, 2009

In an encouraging sign of focusing on real federal acquisition reform, Sen. Claire McCaskill (D-Mo.), chair of the Senate Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee, has scheduled a hearing on July 16th to take a closer look at the Alaska Native Corporation (ANCs) 8(a) program. Sen. McCaskill has sent a letter to twenty ANCs, asking for information regarding salaries and compensation for executives and cash dividends paid to shareholders, company's size and its total revenue and operating expenses, and federal contract dollars and subcontracts received each year from 2000 to 2008.

I have written about ANCs, (here and here), and believe that the ANC programs does need a thorough review as the program has been abused and a source of corruption in government contracting. Although I certainly do not advocate eliminating the program, as the ANC program as originally envisioned has helped a desperately poor and neglected community, this program needs to be brought in line with the other SBA 8(a) small-business programs to promote competition and best value.

I just hope that objective information is collected by this committee, as the focus on executive compensation seems to be a center of attention on many issues regarding acquisition reform. I would recommend to Sen. McCaskill to focus on the impact these programs have overall on government contracting, competition, and their use and abuse. True accountability and transparency certainly falls within the realm of ANCs, and should be reviewed through that prism.

As acquisition reform initiatives move forward in Congress, specifically with the House following the Senate in passing their defense acquisition reform bill, personnel issues continue to be at the forefront of discussions and focus on reform initiatives. Of course it goes without saying that the announcement to bring 20,000 acquisition positions in house at the Pentagon has created more questions than answers, in addition to criticism on how those numbers will be attained.

Of chief concern is how to shore up the numbers considering the difficulties currently faced by the federal government in its hiring practices; a long, burdensome process that can take months to hire a candidate. To help address these issues, OPM issued a hiring guide last year that set an 80 day goal from posting a job announcement and to making an offer. However, almost three months is much too long for a realistic hiring process, specifically when having to compete with the private sector for a limited supply of talent. Understanding the need to bring flexibility and common sense to hiring, two senators active on government reform issues, Sens. George Voinovich, (R- OH), and Daniel Akaka, (D-HI) introduced legislation to revamp federal hiring procedures through the 2009 Federal Hiring Process Improvement Act. This legislation would eliminate the dreaded knowledge, skills and abilities (KSAs) essays on federal job applications and emphasize résumés and thus experience and capabilities like the private sector. The bill further requires federal agencies to eliminate the specific government jargon from job postings, the need to develop strategic workforce plans, and create measures of effectiveness in the hiring reforms created to streamline this process.

Even with an increase in the number of personnel, it is the streamlining of the acquisition process that will be critical to real federal acquisition reform. Critics of the focus on numbers say increasing the federal acquisition workforce might not solve the problems.

There was no shortage of Pentagon acquisition workers in the 1980s, but scandals still occurred, said Winslow Wheeler, director of the Straus Military Reform Project at the Center for Defense Information.

In practical terms, skeptics say, the prospect of hiring tens of thousands of federal employees and ensuring that they have the right skills now and in the future might be difficult and costly. Some contract employees might be willing to become federal employees, but in other cases, there will be gaps while the government searches for people with the proper skills.

Nonetheless, it is a simple fact that the acquisition workforce needs to be revamped. However, OPM chief John Berry has stated that he expected the hiring process could be simplified within a year and to look into a security clearance issue Voinovich brought to his attention.

"We can't wait a year" on workforce development and training, said Max Stier, president and chief executive officer of the Partnership for Public Service. "If you don't do planning right, you're shooting in the dark."

It is the “hurry up and wait” culture that must be broken, along with leadership to bring this reform vision to the federal government to create change. KSAs are a waste of time, as the real focus should be on experience, capabilities, and matching those skills to needs. Its seems that the federal government can begin to see real results in improving acquisition outcomes by focusing on getting the right personnel quickly and effectively through streamlined, private sector hiring processes.

Friday, May 8, 2009

In regards to acquisition reform, the overarching principle should be to streamline processes, eliminate waste, and create a balanced approach to long-term solutions through careful analysis. Although the jury is still out in my mind if that is happening over all the rhetoric being spouted by Congress, one bright spot in this process was the March 2009 Defense Science Board Task Force reportPolicies and Procedures for the Acquisition of Information Technology.

The primary conclusion of the task force is that the conventional DoD acquisition process is too long and too cumbersome to effectively or timely acquire and maintain current technology. Further, the current acquisition process is modeled after weapon systems. Even the current and updated DoD 5000 process is still not the answer for IT. This is the equivalent of the continuous focus by DoD to sink billions into weapons systems to fight the wars of yesterday when the battlefield and needs of asymmetrical warfare and the wars of tomorrow go largely unmet.

IT systems require continuous changes and upgrades, and are evolving faster than the DoD can acquire them (e.g. Moore’s Law). Deputy Defense Secretary William Lynn recently spoke about the challenges of acquiring technology, with a focus on what IT should be purchased and the paradigm shift that needs to occur if the Defense Science Board recommendations are to be effective, if and when they are implemented:

…"We have a tendency to reach for the exotic technology that looks like [it allows for] the highest performance," Lynn said. "It's appealing on a PowerPoint slide, but unfortunately, we need the engineering and technological maturity to make it happen and we don't always have that."

A related challenge is ensuring that contracts don't call for technology that doesn't exist. While a requirement may be "good to have," acquiring the technology or engineering capacity to meet it could cost more or take longer than it is worth, he said.

Lynn named these technology-related issues as the leading cause of schedule delays and cost overruns, but said the key to reforming the department's acquisition processes is people. The budget Defense plans to submit on Thursday will propose a 20,000 person increase in the acquisition workforce between fiscal 2010 and 2015, he said.

Acquiring mature technology needs to be a focus area in the discipline approach brought to DoD by new Under Secretary of Defense for Acquisition, Technology & Logistics Ashton Carter. These mature technologies will include COTS, such that initial faults, inherent problems, and risks have been largely removed or reduced. Some of the principle cost drivers of weapons systems have been the immature technologies that are coveted at DoD, and have so far underperformed or cannot be delivered because the technology simply does not exist or cannot be fully developed.

With this change in focus on acquiring the right technology, the task force recommendations on how to obtain that technology can go a long way to ensure long term reform of the defense acquisition process, and ensure a streamlined process exists for the acquisition of IT.

The task force offered the following recommendations to change the defense acquisition process in regards to IT acquisition:

1) A new acquisition process for information technology should be developed—modeled on successful commercial practices, for the rapid acquisition and continuous upgrade and improvement of IT capabilities. The process should be agile and geared to delivering meaningful increments of capability in approximately 18 months or less—increments that are prioritized based on need and technical readiness.

2) Expanded roles and responsibilities of the Assistant Secretary of Defense for Networks an Information Integration/DOD Chief Information Officer (ASD (NII)/DOD CIO). The ASD (NII)/DOD CIO should have strong authorities and responsibilities for enterprise-wide information policy, enterprise architecture issues, and system engineering.

3) Consolidation of all acquisition oversight of information technology under the USD (AT&L) by moving into that organization, those elements of the ASD (NII)/DOD CIO and Business Transformation Agency organizations responsible for IT acquisition oversight.

4) Ensure the government managers responsible for program execution have the proper acquisition expertise for a successful enterprise IT system acquisition. The right skills sets must include a track record of success, and these leaders must have relevant business experience in the appropriate areas of acquisition, product development, and management.

IT systems are critical to both national security and effective government management. Therefore, the recommendations made by the Defense Science Board, along with the execution of the focused acquisition discipline promised by Mr. Hunter, will go a long way to ensure the DoD can keep pace with the speed of change and the new capabilities being introduced in today’s information age to keep DoD ahead of our adversaries and the world’s leader in technology.

Monday, May 4, 2009

The latest report from GAO on creating lasting reform is a good blueprint for ensuring positive acquisition outcomes at DoD on three fronts: setting requirements, funding, and managing acquisition programs. The current process creates pressures to deliver high performance; estimate budgets lower than reality, and proceed with calendar-driven versus knowledge-driven schedules.

To state the obvious, the report notes that DoD’s overall weapon system investment strategy does not work together to provide the best value to the warfighter and to the taxpayer. Instead, DoD largely continues to employ a service-by-service and individual platform basis to define warfighting needs and make investment decisions. So much for the Joint Capabilities Integration Development System, or JCIDS; created to supposedly address these very issues.

As a result of these incoherent and non-integrated systems for funding “priorities,” the Department routinely does not have enough funding for the number of commitments, creating and exacerbating the competition for program dollars by the services. Further problems identified include business cases established at the program level and service specific, with undefined and not fully understood requirements, with subsequent cost and schedule estimates based on overly optimistic assumptions rather than on sufficient knowledge and reality. Continuing the hit parade is the disorganization of portfolio management, as funding and acquisition processes are led by different organizations and making accountability difficult, further hampered by frequent turnover in leadership positions. Finally adding insult to injury is Congressional pressure for pet projects that provide jobs in their respective districts.

In regards to requirements, the bottom-line is that garbage in equates to garbage out when it comes to program requirements. The requirements definition phase performed during concept development is rarely performed with the disciplined and coordinated approach to tradeoffs among cost, schedule, and performance. For technology programs in the commercial sector, a strong consideration is given to changes in requirements when considered against cost, performance, or schedule. These requirements are analyzed for benefit and impact against cost, and are either modified or eliminated. This approach does not normally happen with the typical defense acquisition program, and the result is rebaselining and scope creep without the business case to support the change or a process in place to analyze the change. Requirements need to be defined upfront, baselined, and managed. However, any management being done is being done in a fragmented, service approach as the GAO reports. Institutionalizing warfighter needs from combatant commands, the principal joint warfighting customer, is the best way to turn the requirements around by ensuring warfighter needs are addressed and integrated into program planning. Further, Sec. Gates noted in the GAO report that the DoD must figure out how to institutionalize the acquisition of urgently-needed capabilities rather than having to do so on an ad hoc basis. Portfolio management is also a new discipline being employed at DoD, although the jury is still out on its effectiveness to alleviate these endemic problems of program accountability.

In regards to funding of proposed programs, budgeting takes place through yet another fragmented process, the Planning, Programming, Budgeting, and Execution system, which is also not synchronized with JCIDS. The current process is basically a sophisticated shell game between the services. Rather than limit the number and size of programs or adjust requirements, the funding process attempts to accommodate all programs. This process creates a competition for funds, with the result that sponsors of weapon system programs pursue overambitious capabilities and underestimate costs to make their programs most worthy to receive the funding – Future Combat System anyone? DoD then must make up for funding shortfalls by robbing Peter to pay Paul, and thus shift funds from one program to pay for another. This budget drill results in reduced system capabilities, cuts to procurement quantities, the stretching out of programs, and the termination of programs to save money. These actions ultimately hide the true future costs of current commitments, making it difficult to do any proper projections or planning. Off the cuff budgets are also not the answer, as DoD has used supplemental funding to go around the budgeting process to fund their programs off the books.

Much like Wall Street, programs that have pursued risky and unexecutable acquisition strategies have succeeded in winning approval and funding. If lasting reform is to succeed, then acquisition programs that present realistic strategies and resource estimates must be the norm. Of note, one of the recommendations made in the GAO report must be given very forceful attention as it is one of the most important and realistic ways to realize true, lasting reform:

…While actions taken and proposed by DOD and Congress are constructive and will serve to improve acquisition outcomes, one has to ask the question why extraordinary actions are needed to force practices that should occur normally. The answer to this question will shed light on the cultural or environmental forces that operate against sound management practices. For reforms to work, they will have to address these forces as well. For example, there are a number of proposals to make cost estimates more rigorous and realistic, but do these address all of the reasons why estimates are not already realistic? Clearly, more independence, methodological rigor, and better information about risk areas like technology will make estimates more realistic. On the other hand, realism is compromised as the competition for funding encourages programs to appear affordable. Also, when program sponsors present a program as more than a weapon system, but rather as essential to new fighting concepts, pressures exist to accept less than rigorous cost estimates. Reform must recognize and counteract these pressures as well…

It is this pressure that must be alleviated, and Congress holds the key.

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About Me

Mr. Gracia is President and CEO of Seville Government Consulting. He is an experienced consultant in government contracting and procurement processes, focusing on small business and government clients. He has 20 years of professional experience providing consulting support for the acquisition, training, and management of services and technology in the government and commercial sector including numerous DoD and Federal civilian agencies. He is a Navy veteran, actively supporting military organizations such as the USO, Soldier's Angels, and serving as CFO for Cigars for Warriors.